Tuesday, October 29, 2013

The National Debt is bad [Updated]

Call me simple-minded if you will, but I think this is a brilliant video:

I have listened with some frustration and some puzzlement to fellow conservatives of my acquaintance who evidently don't think things are this bad, or don't think it was a good idea for the Republicans to try not to raise the debt ceiling, or don't think that America's continually going deeper and deeper into debt is a big deal.

It seems to me that the only way that you can think that things are not this bad and that it is not insanity to keep not only borrowing more but even increasing the amount we borrow each year as a country is because you think there is something so different about "being a country in debt" from being an individual in debt. Of course there are plenty of differences, but as far as I'm concerned, these differences only make matters worse. As, for example, that the actual individual people making this decision don't actually have to have their individual lives ruined by it. Or consider that the debt is denominated in currency which is controlled by the entity (the U.S. government) that owes the debt. This means that in theory the government could utterly trash the currency and monetize huge chunks of the debt to "get itself out of debt." Oh, joy. That actually should mean a duty for more fiscal restraint, not less. It should cause us to resist the temptation to think that our government can just borrow money, use the money to pay for real things--real goods and services--and then print (or e-print) "money" out of nowhere to pay back the debt for the money borrowed to purchase or manufacture those real things. And that we can do this indefinitely. If that isn't pretending that something comes from nothing, I don't know what is.

One "argument" I heard was that Congress had to vote to raise the debt ceiling because Congress already passed an appropriations bill previously that assumed the availability of an amount of money that required that we borrow more money than the then-current debt ceiling would allow. That's a terrible argument. If Congress passed such an appropriations bill, the obvious thing to do is go back and fix it, to pass a different appropriations bill instead that doesn't assume that we're going to go even deeper into new debt than last year. This seems obvious, but evidently not to everybody. Are we really just resigned entirely to the idea that our government should be permitted to borrow money on our behalf without upper limit for whatever the heck they want to spend it on? That not only must our country take on new debt with every year that passes, not only must it never pay down the crushing weight of debt it already has, but that it must increase the degree to which it takes on new debt with every year that passes? Otherwise WE'RE ALL GONNA DIE!!! Speaking for myself, I'm not resigned to any such thing.

The final argument was just that making even the smallest baby steps towards minimal fiscal responsibility is politically impossible, that the Republicans would just lose and be blamed, and that this would have large, negative political consequences which conservatives should want to avoid. But that assumes that fiscal responsibility has no importance in itself whatsoever and hence isn't worth taking any kind of a stand for. In fact, it assumes that conservative politicians should be active enablers of wild fiscal irresponsibility just to avoid getting (admittedly unfairly) voted out of office, since their presence in office is for the greater public good. That amounts to a pretty disturbing implication that the fiscal insanity, not to mention the cruelty to later generations, highlighted in the above video is not very important after all.

So I'm with Cruz on this one, and America will have cause to rue the day that he lost his fight.

If this be simple-mindedness, make the most of it.

Update: Further research, motivated by correspondence with my blog colleague at W4, Paul Cella, has made clear to me that what Congress gave in and agreed to raise was not, as I had thought, the deficit limit for a particular year (i.e., to allow a bigger deficit and more borrowing this year than last) but rather the debt limit--that is, a limit on the total amount of U.S. debt. Such a vote would arise in any year in which there was any deficit. Partly because the deficit in immediately previous fiscal years has been astronomical, it turns out that the deficit in fiscal 2013 is actually somewhat less than in immediately previous years, contrary to implications in the above post. I'm glad to correct the error. However, the video does not seem to suffer from the confusion that I was under. Raising your line of credit simply is being allowed to go deeper into debt than you already are without paying down any of the debt you currently have. Naturally, my position is still that Congress should have gone back and balanced the budget instead, at which point pirouetting pigs would have appeared to perform an aerial ballet over Washington, D.C.


Anonymous said...

The reason globalist/socialist politicians want to expand the (your) debt is not to provide goods or services to the people.
The motivation is exactly the same as
that behind the socialisation of (your) healthcare system.
Both developments fundamentally corrode the democratic process and for America; it's Constitution.
Both developments are designed to bring into being a new form of government.
International corporations quickly merge with state entities and both detach themselves from the host/people. Detached from any real form of control, that is.

This debt issue is actually about the sovereignty of America.
It's a peaceful means of taking over your Republic.

It could still go 'either way' but if history is a guide; you need to turn off your televisions and then hang an awful lot of politicians if The People are to have a future.



Lydia McGrew said...

I think, though, that there are plenty of people even on the right or center-right who truly believe that we have a tiger by the tail and that continually raising not only our absolute borrowing but the debt ceiling is the only way not to let go.

Then there are those who have esoteric arguments (which I think they really believe) that the analogy to personal finances is just flawed from the outset. This group seems really to believe that we can go on like this forever and that the borrow-spend-print cycle is really *normal*, that it would even be a bad thing economically to pay down the debt or even to stop borrowing more every year. U.S. sovereign debt, on this theory, is what makes the world go 'round and in itself our current spiral is nothing to worry about whatsoever.

I gather this is all based on the notion that it's all psychology, all the way down. In other words, that the only thing that is important is psychological things--keeping up "consumer confidence" and the like--and that if we can do that we really _can_ kick the can down the road indefinitely.

Now, my point here is just to say that while *I* think all of these theories are alarmingly wrong, there are people who hold them sincerely and hence aren't part of a socialist plot to destroy the country.

Naturally, those who *are* running a socialist plot to destroy the country (and they do exist, unfortunately) find those theories pretty darned useful. And the more esoteric, the better. The more that people like me who look at a video like this and think it makes sense are made to feel that we just don't understand the deep intricacies of national and international finance, well, the more they can get away with. And if some smart and sincere people (even better if they are on the Right) really believe the theories that "increasing U.S. debt ain't so bad" and pitch them to the simple-minded like me and make us feel and/or look foolish, so much the better.

Anonymous said...

'I gather this is all based on the notion that it's all psychology, all the way down.'

A repellent idea I know; but not wrong just for that reason. All paper money is an exercise in shared belief/group psychology. This is why the gold standard is key.

I cannot disagree with your concern that conservatives are failing to appreciate the importance of an ever raising ceiling.
Also, the accusation that you 'fail to understand the intricacies'; must be a terrible bore.
However, no-one on Earth thinks that Americans will go hungry to pay 'their' foreign debt. you won't.
The debt is owed to whom exactly?
What would they actually do with the US dollars if they were ever repaid?
As you know, the 'derivative debt' alone exceeds the entire 'Dollar worth' of the planet.
So, some intellectually lazy conservatives are right not to be alarmed at 'creditors' demanding payment, but for all the wrong reasons.
Your creditors (mostly British & American financial entities) do not want your money Lydia; they want your country.
Thus, the un-payable debt will be met with real assets. Land, patent rights, schools (privatised) for example.
As for the Socialist?
They are as clueless as conservatives why think ceilings don't matter. No ceiling=no house.
No society=no-one to socialise.